Can a collection agency put a lien on my house for an outstanding bill?

Question

Last year I placed an add for my business in the phone book and was supposed to make quarterly payments for the add. I lost a lot of clients at once and ended up in a huge financial hole which caused me to miss the payments to the phone book. The account was sent to collections and I got a call recently telling me that I had to pay in full or else. They finally agreed to accepting 900 next week and then another 900 each month until it is paid. However I just lost another client and am now unable to pay the 900. The collector told me if I didn't pay up that they would put a lien on my home and I would have to go to court at which point they would take my home and sell it to pay off the debt. Would they really do that over 2800 dollars and more importantly can they do that? If I pay them I wont be able to pay my already behind mortgage. What can I do?

Answer 1

Technically, the collection company can sue you and, if they win the lawsuit, they can place a lien against your house.  

However, if you only owe $2800 then they probably won't do this.

Next, they can't force you to sell your home to collect on the lien. However, it is possible that you won't be able to sell or refinance the mortgage until the lien is paid.

Finally, if you're already behind on the mortgage, your biggest problem is not the phone company-it's the mortgage.  

Answer 2

Tough ride for you - I am sorry.

As to the lien - I think, but am not certain, that the only time a lien can be  placed on real property (i.e. your home in this matter) is when the debt incurred is directly related to the property in question.  In other words, a lien can be placed on the home for unpaid shingles or for not paying a contractor for labor on a remodel job.  I am not sure of they can place a lien against your home for an unpaid advertising bill.  It would be a good idea to check with an attorney however.

Answer 3

They can't put a lien on your house until they get a judgment against you.  If they got a judgment and put a lien on the property, the only way they could take the house would be to foreclose.  However, they would have to pay your mortgage in order to do that.  It's doubtful they will given the size of the debt.

Answer 4

In theory they could, but its really unlikely they would or that it would even be worth it for them to do this.  What they would have to do is go to court and get a judgement against you for the $2800.  They could then attach this judgement to your house and they could start foreclosure proceedings (note that in some states this is not allowed, but in most it is).  However, this is alot of work and time for them and probably not worth it for $2800 (getting the judgement and attaching it to your house may be worth the effort, but probably not actually foreclosing on you due to this).  

Also, when the house sold in foreclosure your mortgage would be paid off first and only if there was $2800 left over would they even get paid - which in this market seems highly unlikely.  So, the foreclosure would probably wipe out the lien on your house and cause them to lose that leverage over you making their case much, much weaker - not stronger.

So, its possible, but highly unlikely it would really go to foreclosure but they may get a judgement and even attach it to your house.

Answer 5

If you put your home on the loan as security, yes they could.  You better get another part time job,  rent out part of your house or maybe get a job with a steady income.  That $2800 won't even pay for a lawyer.  Maybe you could borrow some money from your rich uncle Hugh Feffner.